KKR to buy Bushu Pharmaceuticals in APAC’s fifth-largest secondary buyout

Secondary buyouts have become increasingly popular in APAC since 2018, peaking in 2021 with 45 deals totaling $8.58bn

Private equity giant KKR has announced that it plans to buy Japan’s largest contract manufacturer of pharmaceutical and medical devices Bushu Pharmaceuticals from Hong Kong-headquartered private equity firm BPEA EQT for $769mn. It will be the fifth-largest secondary buyout in APAC in 2022. The transaction will close by Q1 2023, subject to regulatory approval. 

KKR intends to help Bushu Pharmaceuticals scale its business and expand in segments such as injectables in Japan and globally, as well as improve production capacity and quality control. According to Preqin Pro’s Company Intelligence data set, Bushu’s revenue has grown at a 3-year compound annual growth rate (CAGR) of 0.8%. 

Globally, contract manufacturing should grow at a CAGR of 6.6% from 2018 through 2023, according to a 2019 report by BCC research.

Let’s take a closer look at the top 5 secondary buyout exits in APAC during 2022: 

1. La Trobe Financial Services ($1.2bn): In March, Brookfield Asset Management bought Australia-based credit fund manager La Trobe Financial Services from Blackstone for $1.1bn. La Trobe offers real estate credit, fixed-interest investments, and fund management services in Australia’s residential and commercial mortgage market.
2. HCP Packaging ($1bn): China-based cosmetics packaging company HCP Packaging changed hands in May for $1bn to be acquired by Carlyle Group. HCP Packaging was also previously bought by TPG in 2012, and BPEA* in 2015. The company plans to expand globally following the acquisition.
3. Interplex Holdings ($1bn): Blackstone Group acquired Singapore-based precision engineering firm from BPEA* in January for $1bn. Interplex Holdings’ products have applications in smartphones, watches, jet engines, medical devices, and more. It has achieved a 4.5% CAGR in revenue over the past five years.
4. IGT Solutions ($850mn): India-based business process outsourcing company IGT Solutions was acquired by BPEA* from AION Capital Partners for $850mn in February. The acquisition is BPEA’s third business processing outsourcing deal, after Hinduja Global Solutions and Straive.
5. Bushu Pharmaceuticals ($769mn): KKR purchased Bushu Pharmaceuticals for $769mn last month from BPEA EQT. Previously, BPEA had acquired Bushu Pharmaceuticals in 2014 at an enterprise valuation of $670mn.

Secondary buyouts 
In APAC, the number and deal value of secondary buyouts peaked in 2021, with 45 secondary buyouts amounting to $8.58bn (Fig. 1). The aggregate value of secondary buyouts in 2022 has normalized but still surpassed the years previous at $5.15bn.

Private equity investors increasingly view secondary buyouts as a useful way to liquidate investments without waiting through the usual holding period. Secondary investors can also take the opportunity to select quality assets. Secondary buyouts are also a beneficial avenue for PE firms to deploy the high levels of dry powder accumulated in recent years. For an in-depth analysis of secondaries, read the Preqin Global Report 2023: Private Equity.